Dogfight: GM v. Thomas Friedman - Round 3

NY Times
Thomas Friedman
June 19, 2006

ON May 31, I wrote a column accusing General Motors of acting irresponsibly by offering unlimited gasoline at $1.99 a gallon for one year to anyone who buys certain of its midsize sedans, big SUVs or gas-guzzling Hummers in California or Florida. At a time when we are at war in the Middle East, with an enemy who is indirectly financed by our energy purchases, it seems to me that every American, and every American company, has an obligation to reduce oil consumption. No one should be making a huge gas-guzzling Hummer, and no one should be driving one, and no one - certainly not GM - should be subsidizing people to drive them.

After the May 31 column appeared, GM's vice president for global communications, Steven J. Harris, and his colleagues denounced my argument in a formal statement and on GM's corporate blog. This is an important issue, so let me respond to their response.

To begin with, I would much prefer to see GM thriving and growing U.S. jobs - not selling itself off, limb by limb. But as long as GM is giving away $1.99 gasoline for its gas guzzlers, I will be a harsh critic.

Pardon me if - at a time when China is imposing higher mileage standards than America - I don't want to join the many congressmen and senators in drinking GM's Kool-Aid and not demanding that it become the most fuel-efficient automaker in the world. If more people in Washington insisted that GM focus on building cars that could compete in a world of $3.99 gasoline, rather than creating an artificial universe of $1.99 gasoline, GM would not be worrying about bankruptcy today.

GM says that the cars chosen for its $1.99 gas giveaway were chosen because of "their outstanding fuel economy and great consumer appeal." It also says that GM makes more cars that get an EPA-estimated 30miles per gallon on the highway than any other company.

Fact: GM also sells more cars that get 9 to 11 mpg - the Hummer - than any other company. And even though GM justified the $1.99 program as giving consumers a chance to drive some of its most fuel-efficient cars, it did not include its best-selling, most fuel-efficient model, the Chevy Aveo (35 mpg highway), in the program, but did include seven gas-guzzling trucks. GM still does not have a family-friendly hybrid on the market (one is due this summer) - nine years after Toyota introduced the 45-mpg Prius hybrid, which GM scoffed at, at the time.

Next, GM's Harris asked: "How is offering a gas card that may be worth $1,000 any different or more sinister than the $2,000 cash rebate that Toyota's offering right now nationwide on its full-size SUV, the Sequoia?"

Fact: Reading that question, you'd think that GM was giving away cheap gas instead of big SUV rebates. The truth: We called GM dealers in California who said that under the new program they were authorized to offer $5,000 discounts on the 2006 Suburban and Tahoe SUVs - which are like the Sequoia - in addition to GM's unlimited $1.99 gas for a year. I guess Harris just forgot that.

Yes, Toyota makes trucks and SUVs, just like GM. I am not against either. Some people need them, others enjoy them. But I don't think we should be subsidizing gasoline so people who don't need them will buy them or buy the most gas-guzzling versions.

Ah, says Harris, but we offer nine vehicles that can run on E85 ethanol-gas blends, and have made 1.9 million such cars and trucks. Toyota makes none. The truth: The Big Three U.S. automakers started making flex-fuel cars in the mid-1990s after they were given a shameful federal loophole.

As the Des Moines Register explained in an article on May 26: "The loophole works this way: A dual-fuel vehicle that can run on either gasoline or 85percent ethanol, or E85, is credited with a much higher mileage rating than it really gets. That keeps the overall mileage of the cars and trucks that a company like Ford or General Motors makes in any given year within the government's mileage limits."

By agreeing to build flex-fuel vehicles credited with phony mileage, Detroit gets to make many more bigger, heavier gas guzzlers, the paper explained, "without having to pay fines for exceeding the federal mileage standards." For instance, the 2006 GMC two-wheel-drive Yukon 1500 actually gets 15mpg city and 20 mpg highway. But under this loophole it is rated as getting 33 miles per gallon to meet the government's fleet fuel economy standards. "The Union of Concerned Scientists calculates that the loophole increased U.S. oil consumption by 80,000 barrels per day in 2005 alone," the paper said.

If GM, Ford and Chrysler really care about saving oil and the environment, why exploit this loophole? And by the way, even though GM has made 1.9million flex-fuel vehicles, it and the other automakers for a long time did little to inform customers that their cars could run on ethanol - because their real interest was the mileage loophole to make more big cars. "Until recently, the only way to tell was by checking the vehicle identification number," the paper noted. Recently, General Motors has put yellow gas caps on its dual-fuel vehicles to alert customers.

I'm not a car expert, so let me leave the last word to Automotive News, the industry's top trade magazine. Its June 5 editorial said: "General Motors' promotion that reimburses some buyers for gasoline purchases is ill-advised for an automaker that is trying to burnish its green image. The program should be dropped, not expanded. It's simply a subsidy for vehicles that burn a lot of gasoline. And it's one more example of GM's tone deafness on environmental issues. Yes, GM can make vehicles that are as fuel efficient as anybody else's. But it acts as though its future depends on gas guzzlers